(18 March 2024) US stocks slipped lower last week as hot inflation data and continued strength in the labor market dimmed hopes for interest rate cuts. The S&P 500 ended the week fractionally lower at 5117 while the Nasdaq-100 fell 1% to 17,808. This bearish outcome was generally in keeping with expectations as I thought the Saturn-Pluto and Saturn-Rahu alignments would give the bears the edge this week, especially given the short term Mercury-Ketu and Mars-Moon alignments. But while the weekly outcome was negative, the size of the pullback was disappointingly modest.
Investors appear to be hedging their bets ahead of this week’s FOMC meeting. In that sense, any downside we are seeing here can be understood as normal skittishness ahead of a known risk-event. No matter how overbought the market may be, this may be seen as normal bullish profit-taking and hedging ahead of Wednesday’s Fed meeting. To be sure, the data remains surprisingly strong and reduces the likelihood that Jerome Powell will signal any rate cuts. The FedWatch tool reflects the new-found skepticism about rates as the chances for a June rate cut has fallen from 80% a month ago to 55%. The market is now pricing in just three cuts in 2024 as rising bond yields reflect the ongoing strength in the US economy. In fact, the 10-year yield has popped back up to 4.31%, just above that potentially key 4.25% resistance level. If the economic data stays strong and yields continue to rise from here, stocks will have a difficult time retaining their currently lofty valuations. And if Powell delivers hawkish remarks on Wednesday, yields will likely climb further.
The planetary outlook is mixed. The near term still has a bearish bias as Saturn moves through its series of alignments with Pluto, Rahu and Chiron. While these are not full-strength alignments, sentiment could continue to be undermined for another week or so. Once these transits pass, the bear case becomes more difficult to make. The bullish Jupiter-Uranus conjunction will be exact on April 19 and should begin to manifest well before that date…
[…]
This week (Mar 18-22) has some downside risk. Broadly speaking, the 36-degree Saturn-Chiron alignment is likely to exert a negative influence on sentiment at some point during the week. However, it should be noted that this is a fairly weak bearish influence since the 36-degree aspect (360/10) is considered much less important than say, the 90 degree or 180 degree aspect. For that reason, our downside expectations should be modest. It is possible we could see some upside early on Monday as the Moon aligns with Mercury and Jupiter in the morning. Since this alignment is closest near the open, any upside would be more vulnerable to a bearish reversal later in the day or on Tuesday. The Mars square to the natal Mercury in the NYSE adds another layer of bearishness to Monday and Tuesday. Tuesday’s Mercury-Rahu conjunction looks moderately bearish, as does Wednesday’s Mercury-Chiron conjunction. Wednesday’s Mercury-Saturn contraparallel also gives the bears the edge for FOMC day…
Subscribe to read the rest of this week’s newsletter
Photo Credit: William Warby
